The Brazilian sugarcane sector experienced an intense expansion in Sao Paulo State during the 2000s. The aim of this study is to evaluate the socioeconomic impacts of such expansion, based on the social welfare representation proposed by Deaton & Muellbauer (2009). The impacts of sugarcane sector expansion over the average per capita income and over its distribution between Sao Paulo States municipalities were estimated through a dynamic spatial panel developed from the decomposition of per capita income into its main determinants proposed by Barros et al. (2004). Besides the municipal rate of adults in the population, rate of workforce employment and average wage, two other variables were included in the model to control regional differences observed in Sao Paulo States economy: rate of workforce employment in agriculture and farming A&F and its respective average wage. Additionally, in order to determine the socioeconomic impacts of the sugarcane sector expansion, the share of A&F in the municipal area, the share of agriculture in A&F area, the share of sugarcane in agriculture area and a dummy for cities with mills in operation were also included in the model. The balanced panel for the 645 cities in Sao Paulo State ranges from 2000 to 2008. The results of the system generalized method of moments GMM-SYS highlight that per capita GDP presents positive lags in both time and space. The estimated direct and indirect effects indicate that sugarcane sector expansion had a positive impact over the average per capita income and, then, also over its distribution throughout Sao Paulo State since sugarcane sector expansion occurred mainly in cities with per capita GDP lower than the States average. Accordingly, the conclusion of this study is that sugarcane sector expansion that occurred between 2000 and 2008 presented a positive socioeconomic impact in Sao Paulo State.

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